As nations compete for currency advantages, they are also eyeing the world's diminishing resources—fossil fuels, minerals, agricultural land, and water. Resource wars have been fought since the dawn of history, but today the competition is entering a new phase.

Nations need increasing amounts of energy and materials to produce economic growth, but—as we have seen—the costs of supplying new increments of energy and materials are increasing. In many cases all that remains are lower-quality resources that have high extraction costs. In some instances, securing access to these resources requires military expenditures as well. Meanwhile the struggle for the control of resources is re-aligning political power balances throughout the world.

This article is the part 6 from Chapter 5 of Richard Heinberg's new book 'The End of Growth', which is set for publication by New Society Publishers in August 2011. This chapter 'Shrinking Pie: Competition and Relative Growth in a Finite World' looks in greater depth at the prospects for further development in in an increasingly resource strained environment.

The U.S., as the world's superpower, has the most to lose from a reshuffling of alliances and resource flows. The nation's leaders continue to play the game of geopolitics by 20thcentury rules: They are still obsessed with the Carter Doctrine and focused on petroleum as the world's foremost resource prize (a situation largely necessitated by the country's continuing overwhelming dependence on oil imports, due in turn to a series of short-sighted political decisions stretching back at least to the 1970s). The ongoing war in Afghanistan exemplifies U.S. inertia: Most experts agree that there is little to be gained from the conflict, but withdrawal of forces is politically unfeasible.

The United States maintains a globe-spanning network of over 800 military bases that formerly represented tokens of security to regimes throughout the world—but that now increasingly only provoke resentment among the locals. This enormous military machine requires a vast supply system originating with American weapons manufacturers that in turn depend on a prodigious and ever-expanding torrent of funds from the Treasury. Indeed, the nation's budget deficit largely stems from its trillion-dollar-per-year, first-priority commitment to continue growing its military-industrial complex.

Yet despite the country's gargantuan expenditures on high-tech weaponry, its armed forces appear to be stretched to their limits, fielding around 200,000 troops and even larger numbers of support personnel in Iraq and Afghanistan, where supply chains are both vulnerable and expensive to maintain.

In short, the United States remains an enormously powerful nation militarily, with thousands of nuclear weapons in addition to its unparalleled conventional forces, yet it suffers from declining strategic flexibility.

The European Union, traditionally allied with the U.S., is increasingly mapping its priorities independently—partly because of increased energy dependence on Russia, and partly because of economic rivalries and currency conflicts with America. Germany's economy is one of the few to have emerged from the 2008 crisis relatively unscathed, but the country is faced with the problem of having to bail out more and more of its neighbors. The ongoing European serial sovereign debt crisis could eventually undermine the German economy and throw into doubt the long-term soundness of the euro and the E.U. itself.[1]

The U.K. is a mere shadow of its former imperial self, with unsustainable levels of debt, declining military budgets, and falling oil production. Its foreign policy is still largely dictated in Washington, though many Britons are increasingly unhappy with this state of affairs.

China is the rising power of the 21st century, according to many geopolitical pundits, with a surging military and lots of cash with which to buy access to resources (oil, coal, minerals, and farmland) around the planet. Yet while it is building an imperial-class navy that could eventually threaten America's, Beijing suffers (as we have already seen) from domestic political and economic weaknesses that could make its turn at the center of the world stage a brief one.

Japan, with the world's third-largest national economy, is wary of China and increasingly uncertain of its protector, the U.S. The country is tentatively rebuilding its military so as to be able to defend its interests independently. Disputes with China over oil and gas deposits in the East China Sea are likely to worsen, as Japan has almost no domestic fossil fuel resources and needs secure access to supplies.

Russia is a resource powerhouse but is also politically corrupt and remains economically crippled. With a residual military force at the ready, it vies with China and the U.S. for control of Caspian and Central Asian energy and mineral wealth through alliances with former Soviet states. It tends to strike tentative deals with China to counter American interests, but ultimately Beijing may be as much of a rival as Washington. Moscow uses its gas exports as a bargaining chip for influence in Europe. Meanwhile, little of the income from the country's resource riches benefits the populace. The Russian people's advantage in all this may be that they have recently been through one political-economic collapse and will therefore be relatively well-prepared to navigate another.

Even as countries like Venezuela, Bolivia, Ecuador, and Nicaragua reject American foreign policy, the U.S. continues to exert enormous influence on resource-rich Latin America via North American-based corporations, which in some cases wield overwhelming influence over entire national economies. However, China is now actively contracting for access to energy and mineral resources throughout this region, which is resulting in a gradual shift in economic spheres of interest.

Africa is a site of fast-growing U.S. investment in oil and other mineral extraction projects (as evidenced by the establishment in 2009 of Africom, a military strategic command center on par with Centcom, Eucom, Northcom, Pacom, and Southcom), but is also a target of Chinese and European resource acquisition efforts. Proxy conflicts there between and among these powers may intensify in the years ahead—in most instances, to the sad detriment of African peoples.[2]

The Middle East maintains vast oil wealth (though reserves have been substantially overestimated due to rivalries inside OPEC), but is characterized by extreme economic inequality, high population growth rates, political instability, and the need for importation of non-energy resources (including food and water). The revolutions and protests in Tunisia, Egypt, Libya, Bahrain, and Yemen in early 2011 were interpreted by many observers as indicating the inability of the common people in Middle Eastern regimes to tolerate sharply rising food, water, and energy prices in the context of autocratic political regimes.[3] As economic conditions worsen, many more nations—including ones outside the Middle East—could become destabilized; the ultimate consequences are unknowable at this point, but could well be enormous.

Like China, Saudi Arabia is buying farmland in Australia, New Zealand, and the U.S. Nations like Iraq and Iran need advanced technology with which to maintain an oil industry that is moving from easy plays to oilfields that are smaller, harder to access, and more expensive to produce, and both Chinese and U.S. companies stand ready to supply it.

The deep oceans and the Arctic will be areas of growing resource interest, as long as the world's wealthier nations are still capable of mounting increasingly expensive efforts to compete for and extract strategic materials in these extreme environments.[4] However, both military maneuvering and engineering-mining efforts will see diminishing returns as costs rise and payoffs diminish.

Unfortunately, rising costs and flagging returns from resource conflicts will not guarantee world peace. History suggests that as nations become more desperate to maintain their relative positions of strength and advantage, they may lash out in ways that serve no rational purpose.

Again, no crisis is imminent as long as cool heads prevail. But the world system is losing stability. Current economic and geopolitical conditions would appear to support a forecast not for increasing economic growth, democracy, and peace, but for more political volatility, and for greater government military mobilization justified under the banner of security.

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